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Know Before They Go: How to Ease the Pain of Employee Departures

Employees are your company’s most important asset. When one of them leaves – whether by their choice or yours – morale, productivity and sometimes even your company culture can be affected.

Some employee turnover is inevitable when you own a business. Knowing how to handle it effectively will minimize the effect on your remaining employees and reduce the risk of legal action against your organization.

Employee Terminations

In Kansas, Missouri and other at-will employment states, employers may fire employees for any reason at any time. But that doesn’t necessarily mean they should.

To minimize the potential for wrongful termination claims, follow predetermined, written procedures when you tell an employee to leave your company. Generally speaking, you should:

Document employee infractions and performance issues over a period of time before asking the employee to leave;

Treat employees consistently in day-to-day interactions and in terminations;

Provide warnings to employees you are considering letting go so the termination doesn’t come as a surprise;

Explain the grounds for termination clearly and courteously;

Ensure two people – including, if possible, one person with human resources experience – are present at the termination;

Avoid firing anyone for federally protected activities like requests for time off under the Family and Medical Leave Act; and

Comply with federal and state anti-discrimination laws that prohibit employment decisions based on race, color, national origin, sex, religion and disability. For example, there are specific factors to consider before firing a woman who is pregnant, or, in legal terms, “temporarily disabled.”

While firing someone is never a pleasant experience for anyone, other best practices will help make the termination as easy as possible. Preparing what you will say, while remaining unemotional yet sensitive and respectful, will yield the best result.

IRS Rules

Employers should be familiar with Internal Revenue Service (IRS) codes that regulate the health benefits of departing employees. COBRA health insurance, for example, must be offered to employees – and in some cases, to their spouses – who experience “qualifying events” such as terminations. Some of these events cause a dependent’s “involuntary loss of eligibility” for COBRA coverage.

A termination also affects the use of any money left over in the former employee’s health flexible spending account (HFSA). The IRS does not permit HFSA disbursements, transfers or rollovers after employees are terminated – unless they are covered by COBRA.

Unexpected Departures

Although it’s fairly rare, employees may legally and sometimes do quit their jobs without any notice. Sudden and unexpected partings cause workplace anxiety and raise questions about how critical tasks will get done and who will have immediate responsibility for the departed employee’s work. To mitigate the disruption, quickly:

Reassure employees, especially those who are directly affected;

Conduct an exit interview, if possible, to gain insights that could reduce the likelihood of future resignations without notice; and

Implement a succession plan.

Read more here about what to do when an employee resigns without giving notice.

“Offboarding” Employees

Employers almost always take a systematic approach to integrating new employees but often are less strategic about how they handle staff departures. Given the facts that millennials spend only an average of 1.3 years in any position and 10,000 baby boomers retire each day, “offboarding” policies are as important as onboarding new hires in this era of increasing turnover. A consistent offboarding process also serves your company by providing a checklist to ensure you’ve taken care of business necessities, such as getting company-provided devices back from the employee and gaining valuable feedback through an exit interview.

Employee departures, whether at the company’s volition or the employee’s, almost always are jarring. Handling them effectively will help you and your organization get through the upheaval and recognize that these departures also provide an opportunity to examine and realign staff resources if needed and find the right new employee to take your business to the next level.